My husband just quit his job to stay home with the kids. I make around $70,000 a year. I’m finally paying off all my credit card debt this month, woohoo! Now, with two kiddos in tow, how much should I save each month? And what percentage should I put towards investments?
Goodbye for now,
Financially Savvy Mama
Response from THE MONEY MINDER:
Hello There,
Congratulations on your husband’s decision to become a stay-at-home father! It’s wonderful to have the opportunity for one parent to be able to stay home with the kids. With your annual income of 70k and the goal of finishing up your credit card debt this month, it’s excellent that you are taking steps towards financial stability.
In terms of savings and investing, a general recommendation is to aim for an emergency fund that covers 3-6 months of living expenses. Given that you have two kids, it may be wise to lean towards the higher end of that range for added security. Allocating a portion of your income towards savings each month can help you build up this emergency fund over time.
As for investing, a common guideline is to save 15-20% of your income for retirement. This can include contributions to retirement accounts such as a 401(k) or an IRA. You can start with a lower percentage and gradually increase it as your financial situation improves. It’s also worth considering setting up college savings funds for your kids if that is a goal for you.
Overall, it’s important to find a balance between paying off debt, saving for emergencies, and investing for the future. Creating a budget that prioritizes these goals can help you stay on track. If you need personalized advice based on your specific situation, it may be helpful to consult with a financial advisor.
Best of luck as you continue on your financial journey!
Farewell from THE MONEY MINDER.
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